Supporting files

Contents

Introduction

1. This consultation is the first opportunity to help shape the
devolved management of The Crown Estate in Scotland. It focusses on
the interim arrangements that are needed to progress a smooth
transition, from the point of devolution, until the Scottish
Parliament has legislated on the long-term framework for management
of the assets.

2. Good management of our land, marine environment and other
natural resources is of crucial importance to the Scottish
Government and essential for Scotland's future prosperity. Through
the devolution of the management of The Crown Estate assets in
Scotland there is an opportunity to ensure that decisions on use of
Crown Estate assets in Scotland are more transparent, and new
processes for decision-making are put in place to take account of
the priorities of Scotland and which meet the needs of the Scottish
people and local communities.

3. The devolution of the management and revenue of The Crown
Estate assets also provides an opportunity to use capital assets in
a way that enhances their contribution to the achievement of the
following National Outcomes:

We value and enjoy our built and natural environment and
protect it and enhance it for future generations.

We realise our full economic potential with more and better
employment opportunities for our people.

We have strong, resilient and supportive communities where
people take responsibility for their own actions and how they
affect others.

4. Establishing the interim body is only the beginning of the
transfer journey for The Crown Estate in Scotland. Scottish
Ministers plan a further consultation on the long-term management
framework, including opportunities for further devolution of
management of Crown Estate assets. Progressing the smooth
transition of devolution for The Crown Estate in Scotland through
first establishing the interim body will begin to help deliver
greater benefits to Scotland and its communities.

Background

5. The Crown Estate Commissioners is a unique body which
administers certain property, rights and interests which
historically belong to the Crown. In Scotland, The Crown Estate
manages leasing of the seabed out to 12 nautical miles and rights
to renewable energy, cables and pipelines on the Continental Shelf;
37,000 hectares of rural land; gold and silver; and approximately
half of Scotland's foreshore including 5,000 licensed moorings, 800
aquaculture sites, and salmon fishing rights. The Crown Estate
Commissioners exercise powers under The Crown Estate Act 196
[1] in managing The Crown Estate on a
UK-basis, and currently
transfer surplus revenues to the
UK Government. Further
information on The Crown Estate is contained in
Annex A.

6. There is an overriding duty placed on the Commissioners to
maintain and enhance the value and the return obtained from The
Crown Estate while having due regard to the requirements of good
management.

7. It has been a long-standing policy of the Scottish Government
that there should be reform of the administration of The Crown
Estate. The Scottish Government is committed to the principle of
Scotland's communities benefitting directly from our natural
resources, and ensuring that decisions on use of Crown Estate
assets in Scotland are more transparent and take account of the
priorities of Scotland and its communities.

8. The Crown Estate Commissioners' operations in Scotland have
been considered in recent years by a number of Parliamentary
Committees and inquiries including the 2006 Report of The Crown
Estate Review Working Group Report and the 2012 House of Commons
Scottish Affairs Committee Report on The Crown Estate in Scotland.
The 2014 Empowering Scotland's Island Communities and the 2014
Report of the Land Reform Review Group also include sections on The
Crown Estate.

9. Most recently, the Smith Commission (November 2014)
[2] made recommendations on The Crown Estate:

32. Responsibility for the management of the Crown Estate's
economic assets in Scotland, and the revenue generated from these
assets, will be transferred to the Scottish Parliament. This will
include the Crown Estate's seabed, urban assets, rural estates,
mineral and fishing rights, and the Scottish foreshore for which it
is responsible.

33. Following this transfer, responsibility for the management
of those assets will be further devolved to local authority areas
such as Orkney, Shetland, Na h-Eilean Siar or other areas who seek
such responsibilities. It is recommended that the definition of
economic assets in coastal waters recognises the foreshore and
economic activity such as aquaculture.

34. The Scottish and
UK Governments will draw
up and agree a Memorandum of Understanding to ensure that such
devolution is not detrimental to
UK-wide critical national
infrastructure in relation to matters such as defence &
security, oil & gas and energy, thereby safeguarding the
defence and security importance of the Crown Estate's foreshore and
seabed assets to the
UK as a whole.

35. Responsibility for financing the Sovereign Grant will need
to reflect this revised settlement for the Crown Estate.

10. The Scottish Government is fully supportive of the Smith
Commission's recommendations to devolve powers in relation to the
management and revenues of Crown Estate assets in Scotland. Over
the longer term Ministers intend to put in place a new legislative
framework for management of Crown Estate assets -accountable to the
Scottish Parliament and ensuring alignment with Scottish policy
objectives. The new permanent framework can only be delivered once
the transfer completes the devolution of legislative competence.
Interim arrangements for the management of The Crown Estate are
required until the longer term arrangements come into force.

11. The Scotland Act 2016 provides for the transfer of specific
functions, rights and liabilities to a single Transferee on a
transfer date. It is only then that the Scottish Parliament has
legislative competence for the management and revenue of the Crown
Estate in Scotland.

12. Under the interim arrangements, it is proposed that The
Crown Estate assets, and the associated rights and liabilities,
will be managed as a single entity commencing from the point of
transfer of the existing Scottish functions. Section 36 of the
Scotland Act 2016
[3] which gained Royal Assent in March 2016 enables the Treasury
to make a Transfer Scheme to transfer the management functions and
revenues of The Crown Estate in Scotland to Scottish Ministers, or
another body nominated by Scottish Ministers. The Transfer Scheme
has not yet been made by Treasury but will require agreement from
Scottish Ministers as well as the approval of the
UK Parliament. The
Scotland Act also makes provision for an Order in Council to be
made, making arrangements for the management of the transfer of
Crown Estate assets, including establishing the interim body.

13. After the transfer, the Scottish Parliament will have the
power to legislate on the new framework for managing Crown Estate
assets in Scotland. There will be a further public consultation
prior to a Bill being brought before the Scottish Parliament.

Policy Statement

14. There are a number of options that can be considered for the
day-to-day management of the Crown Estate assets in Scotland as a
single entity during the interim period. That function could
potentially be undertaken by the Scottish Government or an existing
or new public body.

15. Our aim is to ensure that the business is operational on day
one of the transfer and that it continues to be so until such time
as decisions are made on the long-term future. The Scottish
Government is mindful of the need to ensure that service delivery
is maintained, but also that the interim arrangements do not
constrain further devolution opportunities.

16. The following draft principles and criteria which have been
developed with input from stakeholders have guided our proposals
for the most appropriate delivery model for the interim body:

Continuity of business delivery

Opportunity for community input at an appropriate stage of
decision-making

Ability to maintain a commercial approach

Human resource implications in terms pay and staff
morale

Ministerial oversight at an appropriate level with potential
to take long-term decisions without requirement to take
day-to-day decisions on assets

Ability to maintain existing fiscal and tax benefits
available to the Crown Estate Commissioners

Ability to establish robust governance, risk management
structures and processes in time for the transfer.

Proposals

17. The following sections set out the proposals in relation to
the establishment of the interim body for managing The Crown Estate
assets in Scotland. Respondents are invited to give their views (
Annex B) and use the response form (
Annex C).

Establishing the interim body - Type, name and status

18. We propose that the interim body will be a body corporate
and a separate body from Scottish Ministers. The reason for
proposing this is that this model provides the best fit according
to the criteria set out in paragraph 15 above. The organisation
currently administering The Crown Estate is a body corporate.

19. We intend for the interim body to be in place until
permanent arrangements will be made in due course through a
Scottish Parliament Bill, following legislative devolution on the
transfer date. It is possible that the interim body will be
retained on a more long-term basis for certain specified
functions.

20. The name we have proposed for the interim body is Crown
Estate Scotland (Interim Management).

21. The interim body is to have Crown status and enjoy the
fiscal, tax and other benefits normally available to the Crown.

Membership of the interim body

22. We propose that instead of 'Commissioners' there will be
board members who will manage and lead the interim Crown Estate
body in Scotland. It is proposed that we make provisions for the
Board to be of an appropriate size, probably no fewer than two and
no more than ten members (including the Chair and Deputy Chair),
appointed by Scottish Ministers. One member is to be appointed as
the Chair, and there will also be a Deputy Chair. The period of
appointment is to remain unspecified to allow for flexibility for
different phases during the set-up of the interim body. Members are
to be eligible for re-appointment.

23. The following eligibility criteria are suggested for
members:

a. relevant skills, expertise and experience.

b. no financial or other conflict of interest that is capable of
giving rise to a conflict of interest with the interim body.

c. exclusion of
MSPs,
MPs, members of the
House of Lords and
MEPs.

24. The appointment of the board provides new opportunities for
community interests to be represented.

Members' terms of appointment, resignation and cessation

25. We envisage that Scottish Ministers determine the terms of
appointment of members. Members may resign by writing to Scottish
Ministers.

Removal of members

26. We propose that a member may be removed from office by
Scottish Ministers under the following circumstances:

a. Insolvency.

b. absenteeism from meetings for more than 6 months without
permission from the Chair.

c. and/or being unable or unfit to exercise the functions of a
member or being unsuitable to continue as a member.

Chief Executive and employees

27. The interim body is to have a Chief Executive, and the first
Chief Executive is to be appointed by Scottish Ministers, and
subsequent ones appointed by the interim body, with the approval of
Scottish Ministers. The interim body may employ and appoint such
employees as it considers appropriate.

Committees and meetings

28. We envisage that the interim body should have committees,
one of which must be an audit committee. There may be
sub-committees.

29. To provide flexibility we propose that the quorum for
meetings of members, including committees, is not specified, and
that the interim body is to regulate its own procedure.

30. We envisage that proceedings are not to be invalid by any
vacancy of membership or defect in the appointment of the Board.
The appointment of any member is invalid if there is a defect in
the appointment process.

Functions

31. The functions of the interim body are all those functions
which are currently exercisable by the Commissioners under the 1961
Crown Estate Act relating to the management of The Crown Estate in
Scotland which will transfer to the interim body under the Transfer
Scheme.

Grants and loans

32. A loan making power for Scottish Ministers is proposed.

Ministerial direction making power

33. We suggest that Scottish Ministers shall have a
direction-making power whereby they can direct the interim body in
writing with regards to the exercise of its functions, such as in
relation to the number of board appointments and the terms and
conditions of employment. The proposal is that Ministers must
publish the directions.

Annual report and corporate plan

34. The proposal is that the interim body shall report on its
performance and activities annually, submit this report to
Ministers, who will lay the report before Parliament.

35. In addition, there shall be a corporate plan, to be updated
annually. This plan is to set out the main objectives, outcomes,
activities and risks for the planning period. We suggest that the
plan will be sent to Ministers for approval ahead of
publication.

Regulation

36. We propose that the interim body will normally follow the
standard procedures (unless Scottish Ministers determine otherwise
or specific procedures for the Crown apply) and is to be subject to
the standard requirements intended to cover all relevant public
bodies in Scotland, including coverage under Freedom of Information
and public appointments (subject to oversight of the Commissioners
for Ethical Standards in Public Life).

General powers and Ministerial guidance

37. We propose to give the interim body general powers to do
things which are necessary or expedient for the purposes of its
main functions or otherwise conducive to the performance of its
functions.

38. We propose to require the interim body to have regard to
guidance issued by Scottish Ministers.

Scope of consultation

39. This consultation document is about establishing the interim
arrangements, relating only to the Order in Council.

40. There will be full public consultation on options for the
long-term framework and further devolution in due course, ahead of
a Scottish Parliament Bill.

Your views

We would welcome your views on the proposals.

Please note that the closing date for this consultation is
Friday 26 August 2016.